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Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does ArcelorMittal fit the bill? Let's look at what its recent results tell us about its potential for future gains.

What we're looking for The graphs you're about to see tell ArcelorMittal's story, and we'll be grading the quality of that story in several ways:

Growth: Are profits, margins, and free cash flow all increasing?

Valuation: Is share price growing in line with earnings per share?

Opportunities: Is return on equity increasing while debt to equity declines?

Dividends: Are dividends consistently growing in a sustainable way?

What the numbers tell you Now, let's look at ArcelorMittal's key statistics:

How we got here and where we're going We looked at ArcelorMittal last year, and it has lost one more passing grade in its second assessment to finish with only one out of nine possible passing grades. The company's revenue and net income growth has been severely hurt because of a combination of weak global steel demand and costs pressures over the past few years. Large debt, weak return on equity and mediocre increase in dividend payouts have costs it several failing grades on this test. Will ArcelorMittal be able to move past its fundamental weaknesses around, or this steel giant is going to be tarnished for some time in future? Let's dig a little deeper to find out.

Over the past few years, ArcelorMittal has been struggling with weak global steel demand, because of a triple whammy of European financial woes, weak Chinese demand, and declining consumption rates in the U.S. ArcelorMittal and its American peers U.S. Steel and Nucor have faced renewed cost pressures as China's state-run behemoths increased their metals production even as Chinese steel usage has declined. Fool contributor Dan Carroll notes that the Chinese government recently decided to cut steel production across its state-run entities, but this hasn't resulted in a major positive impact on global steel pricing yet. In an effort to remain competitive and improve margins, ArcelorMittal and its peers have increased prices across a broad range of steel products. This may backfire, as a supply glut can easily draw competitors into a price war regardless of their intentions on holding the line on margins.

Fool contributor Reuben Brewer notes that major steel producers have been trying to become more vertically integrated, which will help them to control their manufacturing costs. To this extent, ArcelorMittal plans to raise its iron ore production by about 50%, to 84 million tons, by 2015. The company has also been focusing on its metallurgical coal business, which contributes to a significant amount of steel production costs. In contrast, U.S. Steel has been planning to increase its iron ore production by a relatively modest 10%, while Nucor's signed an agreement with Encana to ensure access to cheaper natural gas for its American manufacturing facilities. On the other hand, ArcelorMittal has already shut down six production facilities in Europe, which may lead to a supply and-demand correction, and also sold off a partial stake of Turkish steelmaker Erdemir to reduce debts.

ArcelorMittal could eventually benefit from U.S. housing markets, which have been undergoing a modest rebound over the past few months. China's economic growth, propelled by Chinese government stimulus measures focused on infrastructure development, could also improve ArcelorMittal's position, if for no other reason than that it ought to improve demand and thus support higher global steel prices. According to the World Steel Association, global steel consumption should improve 3.1% this year and 3.3% next year, a modest growth rate that could still have outsized impact on the largest producers. As a result, ArcelorMittal's announced a production boost at its Canadian mines, as well as the construction of new rail track to service those mines, which would allow it to seize greater share in North American markets.

Putting the pieces together Today, ArcelorMittal has few of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy -- or to stay away from a stock that's going nowhere.

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